Exclusive Distribution Agreement

AMENDMENT #2 TO THE
EXCLUSIVE DISTRIBUTION AGREEMENT


THIS AMENDMENT (the "AMENDMENT") is entered into and effective as of the 7th day of March, 2005 (the "AMENDMENT DATE"), by and between Macy's Merchandising Group, LLC ("MMG"), a Delaware limited liability company and successor in interest to Federated Merchandising Group ("FMG"), an unincorporated division of Federated Department Stores, Inc., a Delaware corporation ("FEDERATED"), and Private Brands, Inc., a California corporation ("PB").


WHEREAS, FMG and PB entered into an Exclusive Distribution Agreement on the 1st day of April, 2003, and entered into an Amendment #1 to the Exclusive Distribution Agreement on the 22nd day of June, 2004 (as amended, the "DISTRIBUTION AGREEMENT");


WHEREAS, effective as of December 31, 2004, Federated assigned to MMG, all of FMG's tangible and intangible assets relating to its domestic operations, including the Distribution Agreement; and


WHEREAS, MMG and PB desire to amend certain terms of the Distribution Agreement as hereinafter provided.


NOW, THEREFORE, in consideration of the mutual covenants and conditions set forth herein, the receipt and sufficiency of which are hereby acknowledged by each party, MMG and PG agree to amend the Distribution Agreement as follows:


1. All capitalized terms not defined herein shall have the meaning given to them in the Distribution Agreement. All references in the Distribution Agreement to FMG shall, effective from and after December 31, 2004, refer to MMG as successor in interest.


2. Section 1.1 of the Distribution Agreement is hereby amended to add the following definition:


o "NET SALES" means (A) for Ordered Merchandise ordered
by MMG, (i) the gross sales price of Ordered
Merchandise actually charged by MMG to the Authorized
Seller that takes the Ordered Merchandise into
inventory for sale by such Authorized Seller in its
retail stores, PLUS (ii) internal load, insurance and
freight for such Ordered Merchandise, and (B) for
Ordered Merchandise ordered directly by an Authorized
Seller, the purchase price payable by the Authorized
Seller to PB for such Ordered Merchandise.


3. Section 5.1 of the Distribution Agreement is hereby amended and restated as of the Amendment Date to read in its entirety as follows:


"5.1 ANNUAL MINIMUM PURCHASES. In order to preserve its rights under this
Agreement, including its rights to exclusivity as set forth in Section
2.2 and its right of first refusal as set forth in Section 2.3, MMG
shall order, during each Contract Year of the Term,


Merchandise with the minimum Net Sales amount set forth below (the
"ANNUAL MINIMUM PURCHASE REQUIREMENTS"):


CONTRACT CONTRACT CONTRACT CONTRACT CONTRACT CONTRACT YEARS 6 YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 THROUGH 10 - ----------- ----------- ----------- ----------- ----------- -----------


$25 million $25 million $40 million $50 million $65 million $75 million


The Annual Minimum Purchase Requirements for each Contract Year of the
first Renewal Term shall be equal to the average of the total Net Sales
amounts of Ordered Merchandise during each of Contract Years six
through ten of the Initial Term, provided that in no event shall the
amount used in any Contract Year to calculate the Annual Minimum
Purchase Requirements for the first Renewal Term be less than $75
million. Furthermore, the Annual Minimum Purchase Requirements for each
Contract Year of the first Renewal Term shall not exceed $90 million.
Similarly, t ...